To Get a Home in San Francisco, First Get a $200,000-a-Year Job

http://blogs.wsj.com/numbersguy/to-get-a-home-in-san-francisco-first-get-a-200000-a-year-job-1375/?mod=WSJBlog

by anishkothari • 12 years ago

115 167 12 years ago

blogs.wsj.com

omilu• 12 years ago

$200,000 seems low for a place like san fran. Unless you want to take on some serious mortgage debt.

zinssmeister• 12 years ago

totally agree. It might get you a home in the East Bay but no way you could find something in SF proper.

grundprinzip• 12 years ago

It's only the necessary income to afford the mortgage. The media house price was listed as something like 600k.

rorski• 12 years ago

On top of that, good luck buying a place with a mortgage/20% down payment. A friend of mine was turned down multiple times trying to buy a condo last year because the sellers were only accepting all-cash offers.

dataminer• 12 years ago

What difference does it make to the seller if its a all-cash?

binarysolo• 12 years ago

I'm assuming he had his loan pre-approved before hitting the market?

I take it those load deals entail some risk to deal completion due to the bank requiring due-diligence and making sure the house isn't an absolute lemon?

samstave• 12 years ago

That's income, not house cost.

minimaxir2• 12 years ago

The calculations assume you're buying a house alone. If you have two income providers, the math is slightly more sane.

justizin3• 12 years ago

right, but it's essentially saying that you need at least two six-figure wage earners to enter the market.

melling• 12 years ago

Shouldn't you be able to buy a house alone? And shouldn't you be able to work part-time and pay for college? What you're missing is that you used to be able to do these things but inflation has far outpaced income in certain areas of the economy, and now it's much harder.

The water is getting hot slowly and the frogs can't tell that the water is starting to boil.

aqme28• 12 years ago

I would say no. People should not buy houses alone (or arguably at all) in major metropolitan areas.

edit: I agree with your point about college however.

eshvk2• 12 years ago

Shouldn't you be able to buy a house alone?
The water is getting hot slowly and the frogs can't tell that the water is starting to boil.

In one of the most expensive cities in the world? Hyperbole, apart, irrespective of how amazing the economy does, there will be places which will be expensive as shit.

josephschmoe• 12 years ago

You still can buy a house alone, just not in San Francisco.

Florida, for instance, is very cheap. There are plenty of places in California that are still quite cheap - they're just less desirable.

A lot of San Franciscans are just unwilling to extend to others the opportunities they had themselves. Expensive houses are terrible for young people and immigrants, but great for homeowners.

the_watcher3• 12 years ago

> Shouldn't you be able to buy a house alone?

No matter where you live, it will be more difficult to buy a home with a single income than a dual income.

tomkarlo7• 12 years ago

Given that something like 60% of US households have two incomes, you'd have to expect that home pricing is at least somewhat tied to what you make on two incomes, not one. (And that's why you usually see these ratios in terms of median home price vs. median household income, but everyone immediately thinks of it in terms of per-capita income, which inflates it.)

Crito• 12 years ago

Shouldn't you be able to buy a house alone?

Where? Rural Nebraska? Chicago? NYC? Manhattan Island? Malibu?

All of the above?

It does not seem unreasonable to me that some more desirable locations are out of reach for some people.

nilkn• 12 years ago

The problem is that in the game of home ownership the situation where every couple buys a home that they can afford on the lower of their two incomes is not a Nash equilibrium. If everybody else is doing that, then you and your spouse can be the exception and use both your incomes to get a mansion. Now everybody else sees how well you're living and they mimic your approach. It doesn't take long until it is no longer possible for families to buy a house on the lesser of their incomes.

free2rhyme214• 12 years ago

Why buy in SF when you can rent? I don't see the point and honestly it depends on the size of the property.

yid• 12 years ago

Renting in SF comes with its own set of strings and scams/opportunism, for example a lot of condos set out an attractive initial rent, but then either (a) tack on ridiculous extras like paying for water, and/or (b) raise your rent by a ridiculous amount after your first year.

eshvk2• 12 years ago

(a) tack on ridiculous extras like paying for water

Umm..If your lease says you don't pay for water, you don't. We had a lease that said we didn't pay for it.

b) raise your rent by a ridiculous amount after your first year.

An overwhelming majority of the apartments in San Francisco have stringent rules on how high the rent can go up every year for a tenant who is renewing their lease. Mine was 4% or so IIRC.

aaronblohowiak• 12 years ago

http://www.law.cornell.edu/uscode/text/26/163

bicknergseng2• 12 years ago

I don't really think throwing away $3k+/month for a small 1 bedroom is a better option. At least have that money go towards a mortgage and get the tax deductions on interest...

winterchil4• 12 years ago

If you're buying something comparable it's not $3k/month, it's $5k/month + $900/month in property taxes + all maintenance and expenses + the lost opportunity cost of investing all that money in diversified assets.

ohsnapman• 12 years ago

Questionable - remember that interest over the life of a 30 year loan often dwarfs the principal itself. Depending on how long you live at a place, whether the price goes up or not if you sell and various sales costs, your tax "savings" from deducting mortgage interest might only be a small discount on getting screwed in general.

mrb2• 12 years ago

The problem of buying in SF is that it is a high-risk earthquake area. If a big earthquake occur, not only you may lose your house, but you STILL have to continue to pay the mortgage... on a house that does not exist anymore.

Even if you have earthquake insurance, insurers typically go out of their way to avoid/reduce claims they have to pay (this is exactly what happened to numerous Hurricane Katrina victims: http://rt.com/usa/katrina-state-farm-insurance-fraud-596/ )

On the other hand, if you are renting and your house gets destroyed, you move to a new house and you don't have the financial liabilities a homeowner would have.

mikeryan2• 12 years ago

Why rent if you can buy?

Buying in SF is currently cheaper then Renting[1] not to mention its one of the best investments out there (better then apple stock over the past 2 years) [2]

[1] http://www.trulia.com/trends/category/rent-vs-buy-index/ [2] http://www.businessinsider.com/apple-stock-gold-or-bay-area-...

r00fus• 12 years ago

better then apple stock over the past 2 years)

That's extrapolating based on current conditions. It's a bet that a) nothing meaningful is done about housing supply, b) the overall market doesn't turn south and c) the US cheap-dollar policy of low prime rates doesn't change.

I'd be suspicious about 2&3, though I'd probably agree about (1) - never underestimate municipal incompetence when that incompetence means tax coffers fill faster.

the_watcher3• 12 years ago

Coming from Austin (high property tax, no state income tax), a decent number of very successful people I spoke to there told me they planned on possibly moving to CA to retire simply because of the flipped property/income tax ratio (and them wanting CA weather over the other low property tax states).

justizin3• 12 years ago

what depends on the size of the property? right now rent in SF averages about $2k per bedroom for units available on the market.

pdx65• 12 years ago

Renting in SF is a strong value if you plan to live here for a while, but the property needs to be protected by rent control, otherwise you'll get wiped out during the booms and busts this city has.

Owning is also a strong value over the long term, but it is more complicated between taxes, mortgages, and city ordinances; it also comes with a lot more risk and way more upfront costs.

For people just moving to the city and haven't established any roots, don't rent or own: be a roommate. It is the best deal possible and you'll be own your way to making this place your home, if you want it to be.

htormey2• 12 years ago

"For people just moving to the city and haven't established any roots, don't rent or own: be a roommate. It is the best deal possible and you'll be own your way to making this place your home, if you want it to be."

Solid advise. I have been living in SF for the past six years and this is what I did initially. I now live in a rent controlled aparment and I have no intention of moving.

If you are going to be working in SF another viable option to consider is getting a place near a BART station in Oakland/Berkeley. Both are much cheaper places to live in than SF or the South Bay.

fallinghawks• 12 years ago

When renting is about the same as mortgage payments, why rent?

The question to me is why anyone feels they have to live in SF.

puppetmaster35• 12 years ago

Eng. out of school w/ 0 experience are get $135K+.

I don't see a problem here.

bicknergseng2• 12 years ago

Whatsapp sold for $19billion surely every start up employee is a millionaire.

sliverstorm3• 12 years ago

What about the garbage men and public educators?

Or would you rather we just do away with them, along with the middle managers, telephone sanitisers and hairdressers?

puppetmaster35• 12 years ago

How is one group succeeding hurting other groups in any way. I would argue that this helps others!

Including tax revenue.

As to middle managers, I'd agree.

Thaxll• 12 years ago

Not sure where those numbers came from, when I'm looking for a Google eng w/o xp it's bellow 135k care to explain?

puppetmaster35• 12 years ago

It is anecdotal based on colleague's daughter. Sample size of 1, but I do hire mid level and its above that.

jotux• 12 years ago

A simple and obvious problem is that elementary and high school teachers in SF are making $40k-60k/year. So even if you and your spouse are making >$100k/year and living comfortably in your sf apartment the teachers teaching your kids can barely afford to live in the city.

QuantumChaos• 12 years ago

But if that were the case, then schools would simply be forced to pay higher wages for teachers. That, or teachers would be willing to travel further (perhaps in exchange for slightly higher wages).

In either case, the idea that a city can just "break" because it is too expensive for ordinary workers, ignores basic microeconomics.

The laws of supply and demand imply that wages go up to deal with lack of supply of certain professions. Whether that lack of supply is caused by a nationwide talent shortage, or a local high cost of living, makes no difference.

minimaxir2• 12 years ago

Please don't feed the troll. (see puppetmaster3's comment history)

puppetmaster35• 12 years ago

Name calling is not cool. If you have an issue w/ a comment of mine in history, other that they are not liberal or aligned w/ your POV, ping me offline w/ a reference to it. This down voting because you disagree is also not cool. Look at how other websites only have 'like'. Plus you only give some people down vote, and you can go and down vote each of my comments. hth.

Prices of everything should be relative, else it does not work. Someone is buying those homes.

justizin3• 12 years ago

sure, because you obviously want to live in a town where there are nothing but other engineers, and you clearly want to limit your pool of potential partners in life to other people who have the same type of job and make the same amount of money.

your world is clearly very fucking boring.

pdx65• 12 years ago

You don't need a 200k a year job to buy a house here. What you do need to do is be practical about where you are buying and have about 10% of the purchase price in your savings account. For someone in the low six figures, it is possible to buy, but it will be in the up and coming parts of town, like Ingleside, Bayview, and Visitation Valley.

There is also a reverse advantage of making too little. The mayor's office of housing offers first time buyers condos below market rate. The cap is about 90k for a single person, depending on the property, and works out to about 33% of that person's pre-tax income for a mortgage payment plus HOA dues. There is a lotto to get in on this deal, and there are some steep re-sell restrictions, but for those who want to own it is a real option. For those who make even less, under 60k, the city will help out with an interest free loan up to 100k.

Owning in SF is very possible for those who are willing to put in the work and deal with the red tape.

the_watcher3• 12 years ago

Wait, there is really a way to get an interest free home loan to buy in SF? What are the criteria? Do the terms change if your employment status changes? This screams manipulation to me: Take a $59K job no matter what your qualifications. Get the home loan. Buy. Begin applying for better jobs. Even if you can't resell, a below market home and an interest free loan is incredibly valuable, and if it's in an area you don't want to live, just rent it (under the table if need be).

Do you have a link to the details on this? I'm curious.

pdx65• 12 years ago

Yes.

See: http://sf-moh.org/index.aspx?page=181

No, once you qualified and moved in your income can go up.

You can only lease your property for up to 6 months through the MOH program and the rate is set by them. It must be your primary residence.

Read the fine print. There is a mandatory class too.

salem• 12 years ago

Many below-market-rate places take a long time to sell because the salary restrictions make it difficult to get a loan, even with 10% down. The reality is that you need a large fraction in cash to afford these units. This might be the case if you're selling and moving within San Francisco, but not if you're a new low-income home buyer.

duderific2• 12 years ago

It's a lottery process, so there's no guarantee you'd get the below market home, even if you went through all the red tape.

mbesto2• 12 years ago

It's also worth noting - SF barely got tickled by the housing crisis.

grinich• 12 years ago

There was already a crisis in SF: not enough housing.

aliston• 12 years ago

That's not true. Anecdotally, I had several friends buy nice places in foreclosure in 2009-2010 for roughly 50% of what they were worth at the peak of the housing bubble. On average, housing prices fell by 25%, but (note above), in the lesser known neighborhoods, it was closer to 40%.

http://www.paragon-re.com/3_Recessions_2_Bubbles_and_a_Baby

I think the really established neighborhoods will be insulated if there is another crash -- Nob Hill, Marina, Pac. Heights, and probably the "new" neighborhoods that have gentrified quite a bit with the tech boom -- Portrero Hill, "Dolores Heights", SOMA, Mission Bay. The parts that are just getting hot now, though, could easily become less desirable and get more than a "tickle" just as they did in '08.

mbillie12• 12 years ago

I feel bad for the people who grew up in the area and feel connected because of family or whatnot. As a software engineer NOT from SF, it's probably the last place in the country I'd move to - we have such a relative abundance of remote opportunities compared to other professions. I don't really see why I'd be willing to pay maybe up to 4x+ my housing cost for perhaps a 15% increase in pay. It's a nice place and all, but geez.

downandout• 12 years ago

I feel bad for the people who grew up in the area

The people who grew up there (whose parents owned homes) are doing quite well (at least their parents are) because of the vast appreciation of their homes. Among some of my wealthy friends that have paid ridiculous prices for real estate in SF, I have heard the rather condescending term "thousand dollar millionaires" used to refer to these long-term homeowners that did nothing to create a $1M+ net worth other than pay their mortgage and live in the same place for decades.

Anyway, it's not the people who grew up there that you should feel bad for. It's the people that need to be there for one reason or another and can't afford a living wage with the incredibly inflated prices and taxes associated with living in SF and California in general.

mbillie12• 12 years ago

It's the people that need to be there for one reason or another and can't afford a living wage with the incredibly inflated prices and taxes associated with living in SF and California in general.

This is more along the lines of what I meant, although I'd wager plenty of people grew up renting and have been slowly pushed out of what feels like their home by skyrocketing housing prices as well.

sliverstorm3• 12 years ago

The people who grew up there don't have any extra wealth. So long as their parents continue to live in the same house, it's all just wealth "on paper".

Now, if they live with their parents, that is certainly a leg up in terms of not paying rent (or paying much less rent), but other than that...

ben0x539• 12 years ago

Is being a homeowner really the standard situation in SF one generation back?

daemin2• 12 years ago

That same sort of thing happens in Australia, especially for coastal and beachfront properties. Where property was really cheap because it was far from major centres ended up getting really expensive over time. The only difference here is that those people tend to be squeezed out when they can no longer afford to pay the council rates (local taxes based on the value of the property). So they have to sell up, make a lot, pay a lot in income tax, and move somewhere far cheaper.

muyuu• 12 years ago

Asset rich, when your asset is your home, is the worst kind of rich. Unless you have something else very very compelling to back it up.

If you sell, then say goodbye to your city. If you don't sell, then you don't have this capital, and you still live in a very expensive place.

You can mortgage it for a lot of capital, but this is a poisoned chalice.

Other means to actually realise any of that wealth is to try your luck and speculate downwards, which is extremely risky if that's your only big asset.

Lots of people are "feeling rich" without being realistically able to realise any of this wealth, since they cannot really move away from their city. This is fictitious wealth that constitutes a massive burden to the city and endangers its competitive place in the future.

It will pop sooner or later and its likely to cause massive social problems. It's causing them already even before that happened.

yzzxy• 12 years ago

But if you still live in said house, you're actually LOSING money because of the increased property taxes.

aeturnum• 12 years ago

This is an interesting perspective. I'm from Marin County (the "classic" cloister of the rich in the bay area). While I was growing up (1985 - 2004), there was already a cultural gulf in the community between the older population (families that had purchased houses before the prices spiked) and yuppies who were buying housing at hugely increased prices. On paper, many people in Marin are very wealthy, but in practice this isn't as common as the stats suggest (An ex-girlfriend's parents weren't well off enough to help her attend college, but her parents were considered too rich due to their house for financial aid).

I've been lucky enough to have parents who could afford to help me with school, and have an interest in a lucrative field (computer science). However, many of my highschool classmates did not have one (or both) of those advantages. They are also squeezed between a high cost of living and the lack of jobs that provide a realistic living wage. However, unlike migrants from other areas, the less fortunate locals do not have another home to go back to. I know families that moved their entire family out of the state while their kids were still in school because it became financially untenable to live in the area.

This situation reminds me of the ongoing situation in SF. There are plenty of stories (anecdotal though they may be) of long-time residents being forced out of communities by the economic climate. It is easy for outsides to look at the Bay Area and see a city made up of tech workers making $100k+ a year, but the reality is very different. The same is true of people who bought their houses in a different economic climate. At least the parents have the "escape value" of their houses, as long as they're willing to sell off 18+ years of their lives.

jlmorton• 12 years ago

The pay differential for software engineers in the SF Bay Area is much more than 15%. The average adjustment for all jobs in San Francisco is about 40% higher than the national average.

Looking at BLS data, jobs for Software Developers in San Jose-Santa Clara are actually about 15% higher than the next highest municipal area in the US (Seattle-Bellevue). The average Software Developer job in San Jose-Santa Clara makes $28,000 more than the same job in the New York Metropolitan Area.

yourapostasy• 12 years ago

If we go by the parent comment's "4x+" metric, and if we keep with the traditional personal finance advice of 33% maximum budget allocation to shelter with no other debt and that 33% covers PITI+M, that 33% expands to 1.32x of the budget. In other words, for compensating just shelter costs alone, you need a salary bump of 132%.

This doesn't account for the increased cost of living that should be compensated for, as well as any risk premium for moving in the first place. I don't see how people pencil out the numbers to convince themselves to move into either Silicon Valley or the Bay Area, and I'd honestly like to see how the numbers shake out if someone has made it work. Unless one is Fabrice Bellard-level quality, I don't anticipate most average arrivals to SV or BA ever getting a 200-250% salary increase to just stay in a Red Queen's Race personal-finance-wise.

The landowners of Bay Area are the new store owners of this new gold rush, profiting with much lower risk premiums from the majority of "prospectors"/programmers flocking to the new gold fields while the stories of "hits" keep luring in fresh meat each year.

Balgair6• 12 years ago

Well, that's my family. Grew up in the East Bay and my family has been there for 4 generations. My dad bought the house in '81 for ~60 and now the house next door is in negotiations for about 600. That's a 1000% increase. Compare this to wages, and it's still bad. These are 1 bath, 3 bedroom single story 1.5 acre plots. Basically, Levittown houses. Granted, the elementary is 3 blocks away.

But still, it's insane in the Bay property market again. Anyone from the Bay knows a bubble when we see one by now. When all the hipsters and their credit-cards run out, the market will crash and the locals MIGHT be able to buy something again. There is also the elephant in the room called Prop 13 that is not mentioned here. That, among all other bubble ingredients is the main reason why property in the Bay is the way it is.

htormey2• 12 years ago

"But still, it's insane in the Bay property market again. Anyone from the Bay knows a bubble when we see one by now. When all the hipsters and their credit-cards run out, the market will crash and the locals MIGHT be able to buy something again"

Just curious, but what happened to property prices in Oakland/SF during the last crash (2008)?

nextstep• 12 years ago

60 to 600 is a 900% increase.

dwd4• 12 years ago

Don't count on it bursting.

It's just as likely to go sideways for a decade or two with devaluation only due to inflation. Japan is the best example but Australia never had a major crash and seems to have rebounded again.

Maybe if there was another DotCom crash it might take the real estate market down with it.

rdrdss23• 12 years ago

I grew up in the area, and I no longer want to go back; and neither do most of the friends I grew up with. It has not only gotten more expensive, but the culture has changed significantly.

The intransigent "family farm" that is ingrained in the American psyche is being eroded by a practical reality - and on some level everyone feels it. The newer generations are increasingly less attached to their place of birth. The Bay Area is rapidly changing, and I'm happy for all the people that now live there and call it their home.

It's no longer my cup of tea, but I'll find my place somewhere else. Please don't feel sorry for me =)

JOnAgain• 12 years ago

> for perhaps a 15% increase in pay

Where are you working? Total comp in the bay is often much higher than other areas (data-points from Seattle, LA, and New York)

aresant• 12 years ago

Not to mention the likely minimum 20% down payment of ~135,000 (20% of the median 679,800).

duderific2• 12 years ago

Yep. Almost everyone I know who has bought in the Bay Area (including myself) has gotten help from relatives to come up with the down payment.

Nowadays, you pretty much need all cash to have a chance at a decent place; money is flowing in from China and investment firms like Blackrock, who are buying up all the properties they can get and turning them into rentals.

phamilton• 12 years ago

I'd also say that 20% down on a first home is also rare. Interest rates are low enough that PMI isn't a deal breaker, and salaries are high enough to make it easy to qualify with 10%.

aetherson2• 12 years ago

By definition, half of all homes cost less than the median. Where do you get from there to a "minimum" down payment of $135k?

broolstoryco• 12 years ago

By definition, half of all homes cost less than the median.

That's not what median means

biot• 12 years ago

Still cheaper than Vancouver with a $922K benchmark house price[0] ($847K USD) in Greater Vancouver area, or $2.1M in Vancouver West. Factor in Vancouver's lower salaries and higher mortgage costs, and SF looks particularly cheap in comparison!

[0] http://www.theglobeandmail.com/report-on-business/vancouver-...

msie• 12 years ago

Nobody seems to consider South East Van part of Vancouver or Burnaby, which is close by. Some houses in those places go for less than $600K. I've seen some townhouses go for $460K. http://www.zoocasa.com/en/vancouver-bc-real-estate/2601981-3...

jmj4• 12 years ago

Rent seems to be at least 50% higher in SF though[1]. How is that?

[1] http://www.numbeo.com/cost-of-living/compare_cities.jsp?coun...

eigenvector• 12 years ago

Both rent and home prices are driven by supply and demand, that is, what the market can bear.

In both cases supply is the same, but for ownership, the market is global. You can live on the moon and own property in Vancouver. The price of Vancouver property is constrained only by the limits of how much foreign capital is available to be safely parked in Canadian real estate, not by the population of Vancouver. As you can imagine there is considered more of the former than the latter.

However, the market for rentals is constrained by the number and salaries of people who actually live in Vancouver. Nobody rents an apartment in a city in which they don't actually reside. You can't charge $3,000/month for an apartment in Vancouver because no one will be able to afford it. In Vancouver a junior engineer earns $60,000/year.

Vancouver salaries aren't higher than anywhere else in Canada (in fact they're lower than Calgary and Toronto, both of which have cheaper housing, and about on par with Montreal which has MUCH cheaper housing), so despite the crazy property market this keeps rents down.

SF's crazy rents are driven by the tech industry salaries that are much higher than anywhere else in the country (or in the world for that matter).

potatolicious• 12 years ago

SF prices are driven by intense demand due to the tech industry. Tech continues to import more and more people but there isn't enough room for everyone.

Vancouver prices are driven by speculation, primarily from international investors. The actual demand for housing in the city is comparatively low, and the typical salary for white collar work in Vancouver also doesn't support sky-high prices.

The large disconnect between sale and rent prices represents the large disconnect between who is buying vs. who is actually living in these homes.

Tsagadai• 12 years ago

I thought much the same thing. While it is high it is relative to global demand areas for houses (units and apartments are in a different category for a reason). Demand is high in SF and it isn't just because of the tech industry.

Some stats for Australia just to put another perspective into the mix.

Median house prices for Melbourne: http://www.reiv.com.au/Property-Research/Median-Prices

Median house price for Sydney: http://www.smh.com.au/business/the-economy/sydney-melbourne-...

martingordon3• 12 years ago

This doesn't take into account median salaries. It's possible that the median salary in SF is $200k and everything is OK (it isn't $200k though). While it doesn't really affect the results of this article, it's important to always consider that like-for-like comparisons are being made.

Like I said, the numbers don't change much but if you're curious, here are the results:

  San Francisco-Oakland-Fremont metro area    8.84
  San Diego-Carlsbad-San Marcos metro area    7.52
  Los Angeles metro area 		      6.98
  New York metro area 	                      5.87
  Miami (FL) metro area 		      5.25
  Seattle-Tacoma metro area                   5.11
  Boston metro area                           5.10
  Riverside-San Bernardino-Ontario metro area 4.71
  Washington (DC) metro area                  4.10
  Phoenix-Mesa-Glendale metro area 	      3.57
  Baltimore metro area 	                      3.52
  Philadelphia metro area 	              3.46
  Houston metro area           		      3.17
  Tampa-St. Petersburg-Clearwater metro area  3.06
  Chicago metro area 	                      3.05
  Dallas-Fort Worth metro area                2.99
  Minneapolis-St. Paul metro area             2.95
  Atlanta metro area                          2.48
  St. Louis metro area	                      2.41
  Detroit metro area                          1.29

shasta• 12 years ago

Cool numbers. Are they median home value / median income?

martingordon3• 12 years ago

Yep

daveslash2• 12 years ago

Interesting numbers (I live in San Diego-Carlsbad-San Marco metro). I make 3x+ the median income of my hometown in Maine, but here I only rent a single bedroom in a larger house. I'd love to own....but I've known for a while that my options are either move or make more.

Would you happen to have a source for the numbers? Thanks!

martingordon3• 12 years ago

I pulled the data from Wolfram Alpha (I searched for "median home prices [and median household income] of top 25 metro areas in the US"; I couldn't figure out the correct syntax to get it to compute the numbers for me).

tomkarlo7• 12 years ago

This says more about the arbitrary nature of using city boundaries for studying home pricing than anything else. San Francisco certainly has high prices, but it also has one of the smallest footprints of any major city, and has lots of nearly-indistinguishable residential areas that are adjacent but fall outside its boundaries, particularly to the South and East. If you look just at pricing within the city boundary, it's going to be inflated by the fact that such a large percentage of that area is still relatively close to the "city center" and benefitting from the value that creates.

Meanwhile, "New York City" (which ranked lower on median price) includes large residential expanses that are much further away from the city center, including Staten Island. (Not to mention Los Angeles, which is what, 50X the size of SF proper?)

I'd like to see this comparison done for say, Manhattan island vs. San Francisco - that would be a much more apples-to-apples compare.

defilade• 12 years ago

That's absolutely right, and in the few articles I've seen that break out Manhattan, it's still significantly more expensive than SF. Of course, that's old news, right? And being old news, "Manhattan is the most expensive place to live" doesn't fit into the current tech boom, linkbait narrative that all the blogs and news outlets are exploting.

bane2• 12 years ago

One of the interesting bits then is the differences between the common meaning of a city and the statutory boundaries.

What people mean when they say "New York City" and what it actually is are more or less the same thing (though most people are surprised at how big and diverse the 5 boroughs actually are). People don't really count the NYC Metro area in the equation. Nobody who visit Trenton or New Haven comes back home and says "I went to New York".

When people say lots of other cities, they really mean the metro area. "Washington D.C." refers colloquially to the 7th largest urban area in the country. People can make regular repeated visits to Arlington, or Fairfax or wherever and still go back home and say "I just went to D.C.".

I suspect SF is the same. People can visit anywhere in the Bay Area and go back home and credibly say "I visited San Francisco" even if they never actually stepped foot in the city proper.

edit I notice everybody who disagrees with this premise lives or is from the Bay Area where these things matter. On the other side of the country, all of California north of Monterrey is basically "San Francisco", most people think Oakland is part of L.A. and nobody could pick out SV on a map if their life depended on it.

coolsunglasses2• 12 years ago

I suspect SF is the same. People can visit anywhere in the Bay Area and go back home and credibly say "I visited San Francisco" even if they never actually stepped foot in the city proper.

No, no they couldn't. Residents of SF are quite prickly about what is and isn't the city. You'd say you visited the bay area or possibly silicon valley not SF.

--- Ex-resident of SF

argonaut2• 12 years ago

Long-time resident of Palo Alto here. SF is quite different from other parts of SV, so I don't think that happens.

tomkarlo7• 12 years ago

I kind of doubt anyone visits Oakland or San Jose (both of which are huge destinations in "the Bay Area" but have their own international airports) and says they "went to SF." I sure hope not. It's pretty clear cut if you went to SF or not, since there's water on 3 sides of the city and not much to visit on the 4th side.

maratd• 12 years ago

Nobody who visit Trenton or New Haven comes back home and says "I went to New York".

You're stretching things. Trenton is 2 hours from Manhattan by car. If you stay in Northern New Jersey, you definitely "went to New York". I can get to Manhattan within 15 minutes from Hoboken or Jersey City. When you're that close, you're definitely part of the city.

dkrich• 12 years ago

I'm not familiar with housing costs in SF, so I'm not sure how considering surrounding areas would change the data, but I know in DC that the surrounding areas are by-and-large as expensive (and in many cases more expensive) than DC-proper.

The point being that whether you consider DC-proper, or DC/Arlington/Bethesda/Silver Spring/McLean doesn't really change things too drastically. Expensive cities tend to be expensive everywhere. I know that in Atlanta, for example, you can live in the city center in a nice place roughly for what it costs to rent an apartment of comparable quality pretty much anywhere in Northern VA. There is a floor (a very high floor) beneath which you will not find quality housing and really not much of a ceiling.

scythe• 12 years ago

This was the metropolitan area, though. If you look at the chart, the top-left column states "Top 25 metropolitan areas, by population". After all, everywhere in Silicon Valley is expensive, not just SF proper. San Jose is not itself cheap.

tomkarlo7• 12 years ago

SF isn't in Silicon Valley. San Jose is one of 10 largest cities in the county and Oakland's pretty big too. I'm guessing that "San Francisco metro area" probably can't include either of those two larger cities, nor would it include Silicon Valley (which is 15-20 miles from SF and closer to San Jose.)

jonnycat• 12 years ago

That's funny, because I often make the opposite point about SF. Living in the Boston area, there are areas of Boston that are as expensive as SF (Back Bay, South End), but I can go a very short distance out of the city (Somerville, Medford) and find considerably cheaper housing.

diziet2• 12 years ago

The Sunset or Richmond or any other 'far' neighborhood is not Manhattan-like.

tomkarlo7• 12 years ago

It's not that different, depending how far north you get in Manhattan. The distribution of housing types might be different, but things get pretty residential in the northern end of Manhattan, and you're as far away from "midtown" than those places are from downtown SF.

ceras• 12 years ago

I think the exact boundaries to use for comparison are really difficult to pick, and vary on an individual level. For instance, the superb connectivity of the public transportation makes me feel as if Brooklyn, Queens, the Bronx (sorry Staten Island) are very much a part of NYC. I did not feel this way living in Mountain View; SF felt like a major chore to get to and a different world of its own. Plus it helps that the boroughs have the urban amenities I associate with a city that the suburban Bay Area towns like Mountain View lack.

So, while you might personally want to compare SF to Manhattan (which is totally fine based on what you value), when I think of my own quality of life metrics, I consider the NYC boroughs (excluding Staten Island) a cohesive unit that the SF Bay Area is not.

cantbuyahouse3• 12 years ago

Not SF, but my wife and I are trying to buy a house in Silicon Valley. I can't imagine how this market is sustainable, but all the evidence is that there is no hope for improvement. It's disheartening to say the least.

My wife and I are ~30 years old, have $500k in cash saved, and our combined salary is ~230k. So we are in the upper upper range of earners, and not looking for sympathy. But even with that, we are unable to buy a house or townhouse in mid-range neighborhoods here. The houses all go for 1.3-1.5 M. I don't see that ever being feasible for us.

I don't know that I have a point, other than an anecdote of what this looks like on the ground. I know we could commute or move to a lesser area, but how are there enough people to maintain the volume of ongoing purchases of all these $1.5M houses?

poulson• 12 years ago

Was there a typo in your message? Why would you be unable to afford a home that you could immediately put down a 33% down payment in cash for?

cantbuyahouse3• 12 years ago

That would work out to $6600 a month for mortgage, insurance, and property tax. Or over half of our take home pay.

ateeqs2• 12 years ago

Recently, news was indicating that people were considering homes as an investment again. This is likely what is fueling these prices.

I guess, I would say, you should use your "gut-feelings." If something doesn't feel right, something probably isn't right.

ashayh• 12 years ago

Look in Fremont. Mediocre suburbia and no downtown, but decent houses and schools

TheCoelacanth• 12 years ago

It seems like you are just being too picky. You could easily afford a median house or even a house that is well above the median.

cantbuyahouse3• 12 years ago

Right, this throwaway account is misnamed. My point is not that I can't buy a house, because I could easily move further away or move somewhere with lousy schools or get a small condo. It's that the majority of houses in the city we live in are out of our reach, despite how well off we are (median price in MV is > $1M). And so it boggles my mind how there are enough people in perpetuity to maintain these prices.

buckbova• 12 years ago

Live in Hayward by the train. Problem solved.

marc0• 12 years ago

... and I did think SF is expensive ... average semidetached house with small garden in a suburb of Munich, Germany (1h commuting): 950k USD, quite an average price here. And the salaries are lower than in SF while cost of living is higher. 770k USD in SF looks like a bargain :-)

ThibaultB• 12 years ago

I see a lot of posts about 'incredible' prices in SF and The Bay. But I'm living in Paris and a medium apartment (1400-1600sq ft) here is around €800-1M (±$1-1.3m). And we have 45% taxes ...

jgamman• 12 years ago

seems downright cheap to me here in Auckland NZ

To Get a Home in San Francisco, First Get a $200,000-a-Year Job

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